HOW TO MONETIZE OTT TECHNOLOGY
Streaming video content is not a service for the future anymore, but an ongoing reality that traditional operators will need to adapt to in order to keep up with user demands and further monetize their large subscriber networks.
According to a report published by Pew Research Center streaming content has risen from 24% to 44% (percentage of Americans who only watch streaming content). Furthermore, the global online streaming services market is expected to grow by USD 149.96 billion, at a CAGR of over 18% during 2020-2024 (Technavio).
With the emergence of different OTT services (YouTube, Netflix, Disney+, Amazon Prime, and other pay-TV streaming services), millions of subscribers are accessing video content over the internet. These companies follow different monetization models in order to increase their subscriber growth and improve their chance of monetization success.
We will cover several monetization options in the following chapters
What is OTT?
OTT (Over-The-Top) technology uses the public internet to broadcast video content over the internet, bypassing traditional streaming technology such as satellite and cable. It presents an alternative method to traditional television broadcasting.
Unlike traditional video broadcasting where to access the service you require a television set with a connection over cable or satellite, OTT technology uses public internet and different types of connected devices (STB, Smart TV, smartphone, tablets, laptops, etc.) in order to access desired content and services.
Most commonly it is associated with VOD (Video on Demand) platforms but also refers to audio streaming, messaging services, or internet-based voice calling solutions (VoIP).
With the growing popularity of OTT services, there are multiple possibilities available on how different network operators can monetize their video delivery services.
If you would like to learn more about the OTT from the technology perspective check out this whitepaper "How to start an IPTV/OTT service"
What content can be monetized
While the majority of the OTT content is handled through VOD-based platforms such as Netflix, YouTube, Disney+, and similar, live streams are often delivered with OTT technology. This has become increasingly popular with live TV services enriched with interactivity functions such as Catch-Up TV and Timeshift.
It is possible to monetize both live and on-demand content. Some services use only live content, other services only on-demand content, but it is also possible to monetize a combination of both live TV and on-demand services.
There are 3 main monetization strategies that Operators can use when monetizing OTT content
- Subscription based monetization
Most commonly referred to as SVOD (Subscription Video on Demand), it is widely used in Video on Demand OTT platforms such as Netflix, Amazon Prime, Disney+, and also for ad-free versions of YouTube and other platforms. This monetization strategy is also most commonly used within traditional pay TV services. It's based on a standard monthly fee that a user pays once he subscribes to a specific package of the service. Some SVOD services enable tiered pricing. Like with Netflix, it's usually based on the number of devices used simultaneously on one subscription. In some cases, SVOD hybrid models offer a higher subscription rate option for ad-free viewing (like YouTube).
- Advertising based monetization
Advertising has been used in traditional television for decades and it's one of the oldest monetization methods. While traditional advertising has provided little or no feedback on the ad engagement during a commercial, new OTT technologies enable operators to receive viewing consumption data which is highly valuable information for advertisers and their activities.
When it comes to monetization we often refer to AVOD (Ad-supported Video on Demand), where in order to access a library of content free of charge users are required to watch ads during the content streaming.
As for Advertising dynamics go, normally ads cannot be skipped. Users have to watch the entire ad or part of the ad before they can continue watching content. What is interesting with ad-based service is the option where the platform would push personalized ads to users while watching the service. Since OTT platforms enable data collection, this data can be aggregated on the user level and quantified in terms of interests. Then these users would get a “more appropriate ad” instead of a general ad that is distributed to everyone. In this way, advertisers can optimize the reach of their ads.
All these features enable operators to either charge extra fees to advertisers for advertising distribution (up to 10x more valuable than traditional ad delivery) or the service can be offered as a “Freemium service”, where users are not paying for the service in exchange for ad viewing.
- Transaction based monetization
The transactional method of monetization is where viewers pay for each content file they choose to watch. In case of live TV events, this method is most commonly referred to as Pay-Per-View (PPV). This model gives the end-user a lot of flexibility as the viewer only pays for the content that is chosen, similarly to what iTunes does.
Operators often use this model to upsell the services that are not necessarily in the basic subscriber package and in this way generate additional revenue.
Transaction-based monetization is done through “TV Store” functions where defined products are offered to the viewers in order to enable certain features or content. This method is getting increasingly popular with Premium VOD content where debut films are offered outside subscription packages for a one-time fee.
Best practices when monetizing OTT content
In order for an operator to be successful with the monetization methods described above, it needs to consider several other aspects as well. The OTT platform needs to enable several adaptive measures for the operator to ripe full benefits.
Secure Video Delivery
When choosing a video platform where an operator will distribute the content over the internet it is important that the video delivery is safe and secure. Especially when you are monetizing the content, it is extremely important the content is protected from any piracy intercepts which could copy and distribute content material. This is not only required from the safety perspective but also a requirement from the content owners.
Having a marketing plan is the driving force that would enable the inflow of subscribers to the service. It needs to be properly planned and packaged with exciting content and a proactive service offering. The activities that will represent marketing efforts, will create buzz and excitement and help the service to monetize and grow.
For more information on marketing strategy for IPTV/OTT services read the blog in the link and download our comprehensive whitepaper.
Content & Service Design
There is a nice saying in the TV industry that says: Content is king! It is true that content is the main driver of a successful OTT service and it is no coincidence that OTT services (Netflix, Disney+, Amazon Prime, etc.) allocate huge amounts of budgets for the original content creation. Original content attracts subscribers, and once they are subscribed, the extensive library of content keeps viewers interested in staying for more.
For Broadcasters and pay TV operators it is crucial that they offer exciting packages of live TV & on-demand content (Catch-Up TV, Timeshift functions, and on-demand content). In addition, the upsell options need to be interesting enough to provide a tangible push for new package acquisition with users.
UniqCast is an E2E Turnkey Video delivery Solution Provider. We help operators to deploy, manage and monetize their content in cost efficient and interactive ways. Operators normally lack experience when it comes to different options of content monetization and this is where UniqCast experience comes in place. In the course of OTT project delivery, UniqCast helps operators with service design, creation of content packages, monetization strategies, and service launch.
Want to discuss your OTT monetization requirements? Get in touch with me through email@example.com
UniqCast suggests reading next: ‘How to start an IPTV/OTT service’ whitepaper